Don’t Name It After Yourself and Other Indicators of Potential Entrepreneurial Success

entrepreneurial_quality_by_zip_in_Bay_Area

Entrepreneurial Quality by ZIP code in San Fransisco Bay Area

Sticks and stones may break your bones, and the name you call yourself could also hurt you.

Entrepreneurs often agonize over their new business name, and for good reason. Now a new study advises entrepreneurs not to name the business after themselves and to keep the name short.

Research in the journal, Science, finds firms with

  • eponymous names are 70% less likely to grow than ones not named after the founder and
  • short-named companies are 50% more likely to grow than long-named ones.

The findings are part of a research paper on American startups that tried to get past the rule that 90% of all startups are going to fail.

Written by Jorge Guzman and Scott Stern at MIT, the paper looks at factors relating to the quality of startups. That is, the likelihood of “achieving a meaningful growth outcome … within six years of founding.”

The authors say they have developed a “predictive, location-agnostic algorithm” that can be “used to independently characterize the entrepreneurial quality of firms and locations.”

Previous studies have concentrated on the quantity of entrepreneurship such as the ratio of new businesses to overall population in a given area, the authors say.

In their study, data was compiled in three broad categories:

  • Firm name characteristics
  • How the firm is registered
  • Formal control over IP within a year of registration.

Other findings showed:

 Names associated with high-tech clusters were more likely to grow by: 92%
Corporations (over non-corps) were more likely to grow by a factor of: 6x
Firms with trademarks were more likely to grow by a factor of: 5x
Corporations (over non-corps) were more likely to grow by a factor of: 6x
Firms with patents were more likely to grow by a factor of: 25x
Companies incorporated in Delaware were more likely to grow by a factor of:: 25x
Firms with both a patent and Del. incorporation were more likely to grow by: 200x

Peanut Gallery

My take from the peanut gallery, or as a hurler on the ditch, is that the study makes a lot of sense. I also suspect that people who check all these boxes have learned by experience or have listened carefully to advice.

On naming, for example, lifestyle businesses tend to be named after their owners. If not, the names tend after pets or some other cutsie crap. Something like Happy Meadows Farm, for example, or Lovin’ Puppies or Kissing Kittens.

So, a corporate name, and incorporating itself, says a lot about the founder’s ambition.

Entrepreneurs who pick short names know they want to be memorable or easily searchable.

On intellectual property, entrepreneurs are told for the get-go that it is valuable and that they should strive to develop and protect it — even if they cannot afford a lawsuit to protect it.

The findings are often part of a check list given to entrepreneurs by potential investors or advisors.

By doing their homework and getting some of the basics right, entrepreneurs significantly improve their odds of success.

Image via Sciencemag.org

One thought on “Don’t Name It After Yourself and Other Indicators of Potential Entrepreneurial Success

  1. Pingback: Entrepreneurs Should Give Patents Another Look | John P. Muldoon

Comments are closed.